Patricia Conville, who lives alone near Marbella in southern Spain, struggles to get by on a British state pension of £455 a month and her savings. She has seen the value of her state pension fall drastically this year.

“My pension is now worth about 25 per cent less,” Ms Conville said. “I have had to make lots of little cuts. I don’t go out for meals or buy newspapers and now I have a little saying, ‘Do I want that, or do I need it?’ ”

Ms Conville, who comes from Colchester, has lived in Spain for six years. She is typical of thousands of expatriates who are struggling to cope as the value of their pensions has dwindled. “I am very worried,” she said. “I hope I can sell my apartment and use the money to live on, but at the moment that doesn’t look possible. I have heard some people are going home as they cannot manage but the majority are trying to tough it out.”

Patrick Williams, 60, a retired Metropolitan Police constable, lives with his wife Guillermina near Cádiz, and depends on his police pension of £1,145 a month. It has fallen in value by £206 since July 2007. “We can’t just go shopping at a department store or spend a day out in Gibraltar,” he said. “We couldn’t even afford to see our son who lives in Galicia [northwestern Spain] for a week. He had to pay.”

Andrew Anderson, 72, a former architect, and his wife Merlyn, 66, who live in Marbella, had intended to use their retirement to travel to see family in New Zealand. After the value of their private and state pensions fell by £120 a month, however, they abandoned any thought of it.

“When I came to Spain seven or eight years ago, things were different. Now it is an expensive country to live in,” said Mr Anderson, from Dunfermline.

Even comparatively well-off expatriates are worried. Anthony Locke, a retired City solicitor, is lucky enough to have state and private pensions that pay £30,000 a year. But the value of those payments has fallen by £10,000 in a year and the rent on his apartment near Málaga has almost doubled to € 2,000 (£1,751) a month.

Mr Locke has entertained thoughts of returning to Britain. “If things reach parity or worse, I might think of going home, but I wouldn’t want to. Things aren’t much better in Britain,” he said.

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